The primary objective of this study was to determine whether sphincter preservation is possible among patients who develop anastomotic leakage after rectal cancer surgery. The secondary objective was to determine the factors that may contribute to anastomotic leakage. This is a retrospective review of a prospectively maintained database. All patients with rectal cancer who underwent restorative proctectomy over 1 year were included in the study. The parameters analyzed were age, preoperative hemoglobin and albumin, neoadjuvant therapy, type of surgery, level of ligation of inferior mesenteric pedicle, technique of anastomosis, and defunctioning proximal stoma. In this study, 176 cases of anterior resection were included,of which15 (8.5 %) had anastomotic leakage. None of the factors contributing to anastomotic leakage reached statistical significance on univariate analysis. Among the patients who had proximal defunctioning ileostomy (n = 9), five (56 %) required re-surgery whereas other four were managed with antibiotics and presacral drainage alone (44 %). Among the patients who didnot have proximal defunctioning ileostomy (n = 6), all (100 %) required re-surgery. Among the 12 eligible patients, stoma reversal was successful in eight (67 %) patients. This study highlights the importance of defunctioning proximal stoma in reducing the incidence and severity of anastomotic leakage as well as the need and extent of re-surgery for low rectal cancer. Sphincter preservation is possible in majority of patients who develop anastomotic leakage after rectal cancer surgery.